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North Star Gas Co. v. Pacific Gas and Electric Co.

United States District Court, N.D. California

September 7, 2017

NORTH STAR GAS COMPANY, Plaintiff,
v.
PACIFIC GAS AND ELECTRIC COMPANY, et al., Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT AND SETTING CASE MANAGEMENT CONFERENCE RE: DKT. NOS. 60

          HAYWOOD S. GILLIAM, JR., United States District Judge

         Defendants Pacific Gas & Electric Company (PG&E), Albert Torres, Bill Chen, and Tanisha Robinson move to dismiss the First Amended Complaint (“FAC”) filed by Plaintiff North Star Gas Company. More specifically, they seek to dismiss Plaintiffs claims pursuant to (1) the doctrine of respondeat superior and (2) the Sherman Act, 15 U.S.C. § 2.

         For the reasons set forth below, the Court DENIES Defendants' motion to dismiss.

         I. BACKGROUND

         A. Factual Allegations

         The Court summarized the relevant factual allegations of this case in addressing Defendants' first motion to dismiss. See Dkt. No. 53 at 2-5.

         B. Procedural History

         Plaintiff filed this action on June 9, 2015, asserting claims under federal and state law. Against Torres, Chen, and Robinson (“Individual Defendants”), Plaintiff asserts substantive and conspiracy claims under the civil Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, et seq. FAC ¶¶ 97-118. Against PG&E alone, Plaintiff asserted nine claims, including-as relevant here-respondeat superior liability for the RICO counts, id. ¶¶ 119-25, and attempted monopolization in violation of the Sherman Act, id. ¶¶ 126-44.

         On September 15, 2015, Defendants moved to dismiss Plaintiff's original complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 22. On September 26, 2016, the Court issued an order granting in part and denying in part Defendants' motion. As relevant here, the Court dismissed Plaintiff's Sherman Act claim, finding that Plaintiff's “refusal to deal” theory of antitrust injury was not cognizable under Section 2. Dkt. No. 53 at 41. The Court also found, however, that it could not rule out the possibility that Plaintiff could allege facts to support a business torts theory of anticompetitive conduct, and granted leave to amend on that ground. Id. at 42-43.

         As to Plaintiff's respondeat superior claim, Defendants failed to argue in their motion that Plaintiff had inadequately pled those claims, instead raising that argument for the first time in their reply brief. See Dkt. No. 53 at 29-20 n.8. Because the Court does not consider arguments raised for the first time on reply where doing so could prejudice the opposing party, the Court was not inclined to consider the argument. Id. Nevertheless, Plaintiff's counsel acknowledged at the motion hearing that its respondeat superior claims needed to be pled with greater specificity, so the Court dismissed the claim with leave to amend. Id.

         On October 26, 2016, Plaintiff filed the FAC. Dkt. No. 56. Defendants filed this second motion to dismiss the FAC on November 9, 2016. Dkt. No. 60. On January 24, 2017, the Court issued an order directing the parties to provide supplemental briefing on the legal basis, if any, for allowing a showing of anticompetitive conduct under Section 2 in a regulated industry based on a business torts theory. Dkt. No. 75. The parties did so on February 6, 2017. See Dkt. No. 78 (Plaintiff's briefing); Dkt. No. 79 (Defendants' briefing).

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief[.]” A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). And even where facts are accepted as true, “a plaintiff may plead [it]self out of court” if it “plead[s] facts ...


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